Texas health insurance sets for a massive swerve and a tiered jolt

Will Maddox

Health insurance plans will undergo significant changes with the filing of HB 711, which allows employers to refer employees to top-tier health centers and hospitals based on benefits within health insurance plans.

Currently, if an employer wants a specific hospital to be in its insurance network, the insurance plan must include all hospitals in that network, even if some are underperforming. Also, plans cannot incentivize employees to go to certain hospitals over others by offering more coverage at higher-performing facilities. But everything is about to change. Although Abbott did not sign the bill, it was introduced without his signature and is effective immediately.

HB 711, introduced by North Texas lawmaker and businessman Rep. James Frank, passed 146-0 in the Texas House of Representatives and received only one down vote in the Senate from Charles Schwertner, a medical lawmaker. For Frank, this bill brings market competition to the healthcare sector.

House Bill 711 is a step in the right direction to correct anticompetitive practices and encourage market competition, Rep. Frank said. Banning certain unfair contract terms will allow employees and employers to get the highest quality care for their healthcare dollars.

Frank is motivated by his experience as an entrepreneur and the rising price of health care, which he hopes the competition will improve. Incentivising employees to travel to higher quality hospitals will reduce hospital readmissions and errors that make hospital travel even more expensive.

HB 711 was originally written to remove the all or nothing clause in insurance contracts which states that if an employer wishes to have a hospital in a network, it must have all hospitals, even if those hospitals are more expensive or have worse outcomes than others. Hospital prices vary greatly from one part of the city to another, even within the same network. This section of the bill was removed during the legislative process.

It would also remove anti-tiering that allows insurance plans to steer patients to a particular provider and remove anti-tiering provisions that don’t allow insurers to tier providers based on outcomes or price and communicate those levels to members.

Affordable Healthcare Texas non-profit employers played a crucial role in supporting this bill, meeting with lawmakers and talking to them about the changes the bill would provide, says Chris Skisak, executive director of the group. Regional and state Texas 2036 and State Business Groups on Health were also part of the lobbying efforts on the ground.

Because the bill is effective immediately, benefit brokers and managers can include the legislation in their next health plan. But the anti-steering and anti-tiering contractual provisions remain in force until the end of the year.

After the New Year, plans can use incentives like no deductibles or copays to refer patients to higher-quality hospitals, but it’s up to employers to push for changes, Skisak says. If employers don’t take advantage of tiering and leading, a reasonable person would ask what the rationale is for not being more confident about it, she says. The target is on their shoulders, but this legislation gives them the means to change.

Skisak says The Leapfrog Groups ratings are a great measure of quality, as they prioritize safety. Other leaderboards weigh experience and complexity more heavily. In vitro spina bifida surgery is great, but that’s not why most people go to the hospital, he says. Leapfrog combines safety and quality, while others rely on forthcoming innovation.

Skisak highlighted the National Academy for State Health Policy’s hospital pricing dashboard to check profit margins for different hospitals. Employers in Texas pay a median of 315 percent of Medicare reimbursement rates for hospital procedures, while NASHP data says most hospitals hit 110 percent of Medicare rates. For Skisak, building networks means balancing margin and quality when choosing a hospital. We are by no means saying that hospitals should break even.

Time will tell if employers and intermediaries take advantage of the bill, build closer networks or drive patients. It can be risky to tell employees that their favorite hospital is not in the network or is not part of the incentive plan. We are well aware of HB 711 and our single comment regarding this bill or other bills regarding patient guidance always allows patients to make a choice and have a say in their healthcare treatment, ha said DFW Hospital president and chief executive officer Steve Love.

As transparency and competition bills progress in several states, the Texas bill stands out. We’ll see if employers use the tool they now have to make a change. In terms of House Bill 711 content, we’re now considered a national leader, says Skisak.

Author

Will Maddox

Will is the managing editor of CEO D magazine and editor of D CEO Healthcare. You wrote about health…


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